Zhejiang Leapmotor Technology Co Ltd

HKEX:9863

So welcome to today's presentation of Q3 results. I will go through presentation as usual. And then Later on, we go into the questions you might have. That is the ordinary disclaimer. The Executive Board is unchanged [indiscernible] the Asian business Frank Lager doing all the IP product business from BS and myself being responsible for medical as well the CEO of the company.

That slide is known to most of you, and it basically demonstrated that it becomes more busier than ever. Every time we see each other here on a quarterly basis, there are more companies entering that field, either companies or smaller companies participating in the race of the production, manufacturing and marketing various pharmaceuticals. And I'm pretty sure that we will come also to our latest press release of [indiscernible], which is in other cornerstone into that development. We are talking about gallium and I will talk about a particular about [indiscernible] because our generator remains the cornerstone of our business in the medical business. But wonder Actinium, [indiscernible] and also our hot cell business, our engineering business is a very important contributor to our profit.

Here you see some of our customers, those customers which we are mentioning in [indiscernible] where they were mentioning it for [indiscernible] being our customers, Actinium, our customers and then contract manufacturing end of Q3. So for those who are the PitPoint as in that you will realize Actinium, of course, [indiscernible] is missing there that was already mentioned yesterday.

Our product chain remains -- the value chain remains unchanged. In the upper part, you see everything which we are doing in terms of our Medical segment and the lower part is a huge portfolio in the IP segment where we are contributing with different sources, imaging sources, measurement calibration towards quality insurance and the entire portfolio entering into the field of approximately 50% of Eckert & Ziegler's revenue. Now what are the operational highlights before I come into the financial part of that. First of all, we entered and we received the European approval to really marketing our Galia farm in all European countries. Then there are still countries where that was not possible. And now that gives us more and more opportunities also for the European area, but then later on for non-European countries to become the broad and most available gallium generating producing company.

Then we have been awarded by TMX earlier in August this year to become for their prostate cancer Phase III study. They are so facility here in our [indiscernible] facilities. Some of you have visited us here to have the first glance how that looks like. It is an important role also for the future because we do and we have invested into the CMO facilities and that is also for the years to come in more and more important factor of [indiscernible] plus profitability. And then also, we opened our big engineering hot sell facility in resin a lot of press release and the noise was made about that because it demonstrates that it is not only North America or China, or whatever that also Germany can demonstrate its attractiveness for companies to go to Germany to come to Drayson, to Rosendorf in particular, where also our companies, but other companies also placed and more amount companies want to produce in here in Germany, and we get a lot of also governmental not financial but emotional support from the government here to make sure that address and the environment area that is possible and can really execute what we want to do, namely to produce here. I should hope for the European needs and our company, their IT plays an important role in doing all the engineering facilities here.

Now as I would also mention 2 other issues and to be precisely, that would then once again will show up in the entire year perspective, but Julian might be made it very clear that these 2 effects have a dominant role also for the Q -- for the entire performance we are talking about: a, is the spin-off, which took place at the very first week of October the spinoff of [indiscernible], so which is now a fully fledged independent company have received probably yesterday's Q3 result, which was published, but that was in the end of the combined company in particular. Now separate, and that's why that has become legally effective. And the other topic is very short order to mention that we don't forget about our license agreement, [indiscernible] Australia for the production of Actinium and that is an important milestone, which both companies have achieved and I didn't want to miss here the opportunity to mention that license agreement, although it only happened in November, i.e., in Q4.

So boring slides. Sorry for that. In the last time, you will see that, that is the '23 results full year's perspective. And then, of course, the change, but I want to take that as a starting point that in isotopically 2/3 of the employees are here where the 300 people are working for medical, that is more now being changing because medical is hiring more and more people. And that's why that number will increase. You know that we are about 1,000 people, meanwhile. And also revenue-wise, these numbers, which are not valid for this year only for last year, but the important message is it is still 50-50 revenue and EBIT growth and participation and split between the 2 segments, demonstrating how important also the IP segment for the overall profitability of [indiscernible]

Now let's have a look through the Q3 results in more detail. Here, that is basically all you like to know or I would like to present to you net sales. EBIT adjusted our new number, which we are using since beginning of this year and then also for those here interested in net income numbers at the very bottom line. So our overall sales performance was growing by 17% double-digit growth from EUR 184 million up to EUR 216 million by the end of September that [indiscernible] 17%. Now if you look to the organic growth or the FX adjusted growth that would be even 20% growth or even higher because of some headwinds we had with currency, we only report 70%. But basically, it's FX adjust even higher.

In particular, Radio pharmaceutical growth 42%, I come to that later on 26% as prior year also for medical. But also for Icatu products, we have a 10% growth was prior year. We had a very strong first half year and then the second half year was as predicted slightly softer, but overall, strong performance for the net sales. And if you look to the EBIT adjusted, then here, we see even a stronger growth of 24%, which you see here up to EUR 47 million by the end of September. And then also for those who are interested in the margin is going up to 22%. That is basically something which we wanted to do to achieve by [indiscernible] so we achieved a wonderful result in terms of adjusted EBIT margin by 22% 10% higher than last year, although we had some costs which we had to face our [indiscernible] some costs we have to write off is [indiscernible]. But the strong performance of medical and exceeding their sales gross contributing -- contributed to the strong performance in EBIT adjusted.

Now net income, I will also mention that, that is still difficult to understand because of the hyperinflation effect in Argentina, currency effect and the balance sheet and then, of course, CENTIXA, which we talk of. So it depends to what number you're looking like, you see the numbers here at the bottom.

In medical, in particular, 26% growth for the net sales, about EUR 100 million for the 9 months, first time that we exceeded EUR 100 million sales for the Medical segment and in EBIT adjusted, 31%. So really super performance for the Medical result. Maybe have -- gross profit was increasing gross margin logically also then going on, although we had to increase our cost for our new projects, in particular, depreciation where we have now finished the construction of our GMP suite here in Berlin and other sites.

So that's now by depreciation in these numbers already and that also have higher personnel costs, but still the overall increase in EBIT margin is higher than the net sales increase which is important. Now normally, we always talk about the generator business and that is here for 10 million in generators, super, but also in [indiscernible] business increase in sales by EUR 5 million up, but also the others. The duty [indiscernible] radiotherapy and lead equipment both growing about EUR 1 million compared to last year. So overall, good results for the entire medical segment.

In the [indiscernible] product, we also are about 100 increase by 10%. And due to the extraordinary strong increase in gross [indiscernible] due to the good product mix there was almost 30% growth increase from EUR 19 million to EUR 25 million this year and if you look to the EBIT adjusted margin it's up by 22%.

So basically, I jump the 1 slide back here, 23% for medical, 22% for IP in this particular period of time, which is really a good result. We mentioned that the First half year for IP was very good starting and then softening a little bit in the second part of the year. And then you see here the high [indiscernible] effect in the lower part.

Now if we want to compare why we do report adjusted, nonadjusted EBIT. There are some effects. These are currency effects and financial results and of course, the hyperinflation effect. That's why if that is taken into consideration, EUR 46 million for the first 9 months of this year compared to EUR 10 million lower EUR 37 million of last year. That is where the EUR 10 million increase is deriving from.

Looking to the regional split of the countries. Europe, basically unchanged, 1/3 of our overall sales are coming from Europe, whereas 50% of our sales are generated in Americas, particularly, of course, North America, particular the increase of our generators are a strong demand also of our higher activity generator for those who are more in the product portfolio. We have to generate 50 with 50-meter we have a stronger price as high generator Medicare 100, and there is a strong demand because the ongoing imaging procedures, the increasing amount of procedures are triggering then a higher demand of generators. And without giving out too many details here and talking about all the products, which is boring [indiscernible] free already by now our order book for the first month of next year. completely full. So production is running at its full capacity also for the next year already.

Asia increased here on a low level. That's why sometimes it's increasing double digits and it goes will be down. So it goes up and down in a higher variety and fluctuation. But overall, it represents a double-digit participation of the overall growth, and that is due to the China effect.[indiscernible]

Now here, you see the extrapolation and the development of our radiopharmaceuticals, radiopharmaceuticals are our ice tops either in bulk are or in generators, coal kits, but also the engineering part, which is also included there. And we do anticipate a sales of EUR 150 million by end of this year, which represents a growth compared to last year of 36%, and we are not showing any longer the inorganic growth of Tecnonuclear, which took place in 2021 and 2022. So it's all now [indiscernible] completely in our growth story. If you have quarter-by-quarter, then you see here the performance of the individual quarter up to Q3 of this year. And then Q4 is of course business.

Balance sheet, how does the balance sheet look like? We have increase in cash. So normally, we say last time, I think, when we met it was 70 minus 20, now it's almost 100 minus 20 [indiscernible]. So our [indiscernible], our cash funds quite filled up again, which is good because we do want to invest into our facilities and that's why cash is king in particular of increasing interest export that we can finance our activities out of our purpose. And the rest is relatively unchanged here.

So no big change compared to last year. The -- our key performance indicators, key figures if I mentioned already here, 20% growth in our EBIT adjusted of EUR 10 million more than last year. Cash flow strong increase in cash flow investments, not so strong so far. More to come, and we might talk about that cash as I mentioned, EUR 100 million loans, we paid -- repaid a little bit of our extra loans, equity ratio above 50% in headcpunt increased by 7% by 1,100 people so far by the end of September.

So here, once again, the key numbers mentioned again, I skipped that one. And the outlook, now that is probably the triggering point of our discussion. We have, as of today, not changed the guidance. For the time being, we want to keep it here as it is only 6 weeks left, but we will talk about that in a couple of minutes. What is happening until the end of the year and beginning of next year. So for those who are interested to see where [indiscernible] will show up. And there is a conference call later today with Berenberg and then next week is Jefferies and then we have the in habitat form, and then we have the other conferences, including the quarterly reports of [indiscernible] throughout next year, including the general meeting, which takes place here in June 18 of next year.

Thank you. That was my presentation. And normally, I try to stick within the first 15 months here to demonstrate and present the story. So we do open the floor for all kinds of questions. Please use your electronic hand for whatever you want to comment or to ask about and then together with the help of my colleagues we were through 1 by 1 through your questions.

So who is first? So I see the first question from Alexander [indiscernible].

Alexander please.

I think maybe the first 1 on generators. You showed the number as of 9 months, the generators have grown by EUR 11 billion top line. I guess the question is what is driving it? To what extent is it driven by the CE mark that you have received? Or is it still that mature markets require more generators to accommodate larger volumes of imaging. And I guess how much dynamic you still see in this business going maybe into the next year.

That's the first one.

Okay. wonderful. It basically -- [indiscernible] a mixture of various components. The new granted received CE mark is not really playing a substantial influence in that sales growth so far because of 2 effects. Most of the countries were already covered with generators. So it is all due respect to countries like like Bulgaria or whatever, now being entered and added also to our list, they will not buy tomorrow order 100 of additional generators.

So it is important that we do supply, but then by finding our distributor or whatever. So the CE mark for [indiscernible] will play a role in rate next year than this [indiscernible] . B is that we are selling generator for commercial use, for radio pharmacies, for hospitals, for clinics. But we are also selling generators for pharma companies, which they are used for clinical studies because they are using our generator for new compounds being then entered into the market later on once the product has achieved commercial grade and market authorization.

These generators normally are sold on an individual basis on a slightly higher price than if 1 radiopharmacies orders fifth generates on spot or has a 3 years contract. So that's why we have not only a volume effect, but also we have a price effect. Which helps if we sell some of these scientific, so to speak, generator that is at a slightly higher price. And then finally, the most important topic is the U.S. market, where we see an increasing demand in generators because if you look to our competitors, that the gallium competing compound which is F '18 produced by [indiscernible] they have unbeaten success. But also if you look to Novartis and Tenix, which their sales numbers of their compounds, both imaging and therapy that is an increase. And even you have also seen that the reimbursement topic has become quite comfortable for those companies also in the time to come.

So increasing demand of therapy means increasing demand of imaging, means increasing demand of generators. And that's why even sale of purchasing one generator by a pharmacy once a year, they continue to purchase on generator a year, but they have doubled the amount of quality by purchasing a generator price is high. And also we see price, which is higher than the [indiscernible] and [indiscernible], of course, has a much higher price than [indiscernible] 50. So here, we have volume and price effect in the North American hemisphere.

Now the outlook for next year, I continue to see that countries like Japan, small market, but high price, China, big market with lower price, are countries, big, important countries to be added to our list of countries being supplied generators. To what extent we will see real numbers already by next year. I doubt that, that will happen an important influence because the registration procedure is complicated that will only happen by '26 to substantial intangible effect. But there are other countries, more countries which are added, and that's remain extremely positive also for the generator business. And when we come in March next year for the outlook of '25, then the Generator business will continue to play an important role for the overall performance.

Okay. Then I take Lukas [indiscernible] for the next question.

I have just 1 question relating to [indiscernible] announcement from yesterday because I was a little bit surprised that you now also do such license deals in terms of isotope production. So can you share a little bit of your thoughts on strategic side from [indiscernible] going forward or in terms of this kind of deals? And if we should expect more deals like that.

Okay. Yes, yes. I think it's not a contradiction to what we have always said because if we now speak to pharma companies, they have a demand which nobody can fulfill. Now what can a pharma company do -- they can also sit and they only sit in their corner and wait for companies like Acacia and others to start producing and then do it and failing and do it again and being smaller or bigger, whatever.

So a lot of companies will go that way because they do not want to enter into the field of own homemade isotope production. Tax is one of those companies who have chosen another way, they want to be on one side, independent from other suppliers -- but simultaneously, they need also the supply in order to be sure that in case their own production fails or it's not as effective or whatever, whatever might happen that they have the second supplier.

So basically, what companies like [indiscernible] are saying, we need both. We need a supplier and we need someone who helps us in setting up an own production facility. Now if companies like [indiscernible], knock on my door and ask for both options, then the Americans might say it's doubled it. We would are happy that companies are using on the short time, they have a license agreement.

On the midterm, we remain a supplier of [indiscernible] also supplying them with [indiscernible] in dibsourcing strategy and also on a short-term scenario. So that's why that deal is quite attractive for us in getting cash at the very beginning for a license in brakes, if we don't do it, they might have chosen someone else doing that for them. So better I do it than someone else's do it. And then simultaneously, we remain isotope producer for [indiscernible] and others. So very attractive. And with [indiscernible] in particular, we have a long, long-lasting relationship. You know that they also took over our site in Belgium [indiscernible] which we are not using anymore and we had a deal some years ago where they took over that business and there are other cooperative activities where we jointly do things together. I mentioned our CMO, cavity and also Lutetium supply and others.

So that's why it also fits to the same strategic [indiscernible]

As part of the question, should we expect more of this.

There is nothing to announce as of today. But if [indiscernible] is asking for the same topic once again, was to ask, can we have a lutetium line in-house? Or should we ask how or should we ask someone else doing that, I would probably not deny it. If you ask me, will be announced a second license deal by tomorrow, the answer is no.

Out in the next months and quarters.

Yes. It always takes 2 to [indiscernible], Lucas. And if I go to the nuclear conference in Hamburg, then everybody tells me I need, I need, I need. I need it now. I need tomorrow. I don't want to pay for it, but have you have to do everything on your own risk. And that is something where for various reasons, we say we do whatever you want, but we don't pay it or out. So there must be a risk-sharing approach and we are discussing these ideas. In the old days, it was called public private partnerships or something like it. So we are happy to discuss it, but also for big companies, money is a high value, it good. So it's not. We might continue the discussion, but it's not unlikely, but there's nothing now I can announce you.

Then I have -- if there's no more question from Lucas, then I go further on to Nicolas.

The first one is probably a yes or no question. But on the GigaFarm100, are we to assume that it's higher profitability that lower version or it's kind of the same?

Yes.

Okay. Great. And next question, I think, is on CapEx. I think last time we spoke, you mentioned that you will have slower than anticipated CapEx. Where do we stand as of today? And do you remain with the statement or a [indiscernible]

No, Also, yes. also, I mean, like the French, you want to have to get and you're asking [indiscernible]. So you can choose which yes, you take for this question. But this is lowering down process because we are starting our Aimia production in Park by the end of the year, we sold and then later on, we do click the button for our own production. But first, I want to have the proof of consent that that's why it's a slight detail of starting point in these big investments.

So it is yes.

Okay. Great. And maybe a last one, this is more broader. We are starting to see that there is a lot of excitement across all fartherapies. And so I was wondering if you could maybe elaborate on what's the let's say, decision-making strategy that will say we need to invest into a new [indiscernible] and maybe start developing a lead generators, for instance, how do you think about new opportunities?

And what's the, let's say, this year and gains that you take.

Yes. So if you go to a commodity, if someone asked me to produce or to set up a new production line for which is a commodity meat buyer. It is a no-brainer. And if I get the money, I do it by tomorrow. And then if you go to the more advanced one and to the extreme advanced one, I can also do whatever a customer wants me to do. But the more we look into the future, the higher the risk gets and the higher the risk is I want my partner to step in.

Now if you particularly asked about lab, which is beyond [indiscernible] -- and then in considering the extremely short half-life of net. So there are a lot of technical issues, which have to be handled, which we have a cooperation with [indiscernible] and our Boston facility and we are also talking to others. But the more you go into the future, the higher the risk part of the partner has to be. In other words. We do that, but then the financial commitment has to be very good. We see in Adam, do I spend now a lot of effort into land. No. Do I spend a lot of effort in making sure that our [indiscernible] yes and even looking Actinium, the latest forecast is that not before '27, Pharma will enter the commercial field that is 3, 4, 5 years expected before we see substantial tangible Actinium sales. And then on by 2033 we will have here in that field, a blockbuster area. Now for that, I will have lost all my remaining here.

So Alexander, I think I interrupted you before, you wanted to have the second and the third and the fifth and the tenth question. So once again, back Alexander.

Yes. I have a couple left indeed. So maybe on the Telx licensing agreement, I think it mentioned in the press release that -- you also are entitled to access to a higher availability of Actinium. Could you just elaborate what that means? Does it mean that whatever [indiscernible] is producing, but is not needing for their own needs you're allowed to market? Or how do you interpret that?

Before I interrupt you, I better collect all your questions. Otherwise, I don't want to [indiscernible]

Okay. That's one. Then I also was wondering on gallium generators, if you could maybe provide some color on what is the share of generators that are higher volume and whether you're seeing already sort of an ongoing dynamic where the current installed base is being substituted by the higher volume generators. And where do you think it could go in terms of mature market?

Is it possible that all generators at some point will be high volume? Any thoughts on that? And then two, the last ones are one is on [indiscernible] CMO contract, if that could be meaningful in terms of revenue earnings contribution over the next years? And what is the sort of phasing of this contract? And lastly, on Y90 I think a couple of years ago, there was a lot of noise around China Grand Pharma acquiring [indiscernible] and bringing the therapy to the Chinese market.

I think that has sold somehow. I don't know if you can -- you have any update or progress to share whether this still should be viewed as an unlocked opportunity or whether we should not really think about it anymore?

Yes. Okay. Thank you. So and [indiscernible], so the deal contains of various parts in -- it is a license deal or is even something as a copy color, which can be used then also just head up production side on [indiscernible] outside. Now the question is to what extent that will be able -- our production facilities and their production facilities will be able to produce whatever is needed on those sales. We are producing it to sell it. The others are using it for their own purposes.

Now if they have excess capacity, then, of course, it does not make sense to put it into the waste but make use of it and that's why we have a good agreement how to cooperate also on excess capacity. Regarding the other [indiscernible] question, I combine these 2 questions, that is the CMO activity. If you look to clinical CMO activities, for [indiscernible] and others, is a non carrying business. It's a noncontributing.

It is a non-substantial business. There are basically 2 reasons or 2.5 reasons why CMO is so attractive for a changes into commercial production. Commercial production is really something which matters i.e., [indiscernible] and others. So if you want to become the commercial supplier, you have to be there from the very beginning and also a pitch for the clinical research, a; and b, that links to the isotope supply companies who are in clinical studies are very early making the SMPC, clinical data, all the formulas putting together. And then they want to make sure that our production center is company ABZ, together with the isotope producing company.

Now if we have the chance to convince our customers by saying we want to become the commercial product commercial producing entity and we also your isotope supplier, then we have to do that from the very beginning onwards or I open the door from the very beginning, and that's why currently now. The [indiscernible] activities does not play a major role in the profits I just presented. But like the others, if this transfers into commercial production, then we have a different scenario. And if you combine that with the cross-selling activities of our isotopes, it's even better. That's why the CFO activities for [indiscernible] and others are really meaningful for us but also only on the midterm. And then you have had the questions regarding the Gallium generator.

If you talk about the high volume generators, you're talking about [indiscernible], twice as high as the Galia farm 50. They are currently only approved in North America, where their half is in terms of numbers. You can either look in terms of money. You can look at terms of activities. You can look in terms of devices itself, it's approximately 1/3 of the generators which are forced to third, which are based on the entire volume. And in the moment, we get also European approval, and then I'm sure that this will then also swap over to the European area.

Now America is a country where the acceptance of radio isotope-based imaging procedure is not only higher accepted, but it's also reimbursed and higher price than in Europe. So even with the approval of Galian100 in Europe, still these companies like Novartis and other will have continuous challenges in getting reimbursement in all these countries for that imaging procedures, which are still new pace. But I do expect that also [indiscernible] will become here a success. And if the regularly, then imaging core success and then also Calian should participate on that.

Lastly was [indiscernible] China. Yes, there was from investors or educated parties statement that within 5 years, the sales of in China should be as as in the rest of the world that has so far not materialized. We are producing and supplying to China GMP material to China from both sides and that works successful. However, the numbers which originally were mentioned time in 5 years as big as rest of work has not been taking place. That is you can name whatever reason, but this is still on its way.

So I think these were the 4 questions -- thank you. Then we'll switch to Switzerland, and I welcome Jean-Marc here.

It's a numbers question, I'm afraid. And if it gets too complicated, maybe we can also take it off-line. But I noticed that over the years, the gross margin in Q4 always tends to be quite weak. We had that in '21. We had it in '22. It was also the case in '23. I mean, should we expect the same thing now in 2024? And if yes, can you explain why there is this strong seasonality of weak gross margins in Q4?

Yes. Yes. I give 30 seconds lead time to my colleagues, Julian and Olivier to jump in. In the meantime, yes, right, your Q4 is regularly a shorter quarter because it stops basically at the beginning of December, and the number of procedures are going down there. There is no imaging procedure between Christmas and Mediasite's radioisotope delivery companies are closing down their factors. That's why the business really goes down and not to a surprise, but rather even if you look to the implant business, operated therapy, all these things are not taking place in the last days of the year.

But may I interrupt quickly? I mean, it doesn't really show on the sales line. The sales line in Q4 tends to be actually quite okay. I mean it's not that tends to be the weakest quarter in terms of sales. It just tends to be a very weak quarter in terms of gross margin.

Yes. That's why I wanted to bridge a bit high in that Oliver can here jump in or [indiscernible] by saying what costs are then coming up, they have forgotten about the entire year, which is nonfirst -- so Olivier or Julian, who wants to take that question?

Maybe I take first. So first of all, it's not always revenue-wise. That's true. Last year, beginning of the year was weak. End of the year was stronger this year is the other way around. So namely Q4 is also this year by far not the strongest. That's the first thing. And the second thing, at the end of the year, even though we are trying as good as possible to take assumptions over the year to look at our provisions and stuff. But at the end of the year, we will always have our Q4 reassessments of the provisions and all these considerations, all the impairment tests, et cetera, et cetera.

So -- and this is still, even though we take some assumptions upfront and try to tackle as much as possible earlier. This will still be the case over this year.

Okay. And maybe an add-on question in that regard. I mean, when I look at the operational segment also but not just in Q4, we have kind of a steady progression then in Q4 because of the weaker gross margin. I understand the operational segment also tends to have a lower margin. But can you help me with the other cost line or whether we call it holding costs or other costs, et cetera, I mean this line jumps around quite a bit. It has last year. And also this year, we went from a negative number in Q1 of EUR 2.13 million. In Q3, it was a positive number of 330,000 on a nonadjusted basis. Can you help us out a little bit what really affects that cost line?

So first of all, I not able to go really into 1 specific number now as I don't really know what you're exactly looking at. So when we really go into detail -- this is maybe rather something to really take the time and going to do the detail together. But very [indiscernible]. In others, there was so much going on unadjusted in the last 1.5, 2 years, especially with the spin-off of Pantixafarm, all these costs, everything is in there or next part was in there. So the first time we changed all these costs related to the spin of opanticofarm have been reclassified in Q3 this year. So there is a shift from here to there related to the spinoff related to other things related to as 1 example in the presentation of Halo to the reconsiderations with the Bechara in Berlin. And all these topics pop up. So -- if we really go and look at a quarter we have topic, then we should go into detail that easy to answer just in 1 sentence.

Okay. Then my final question for you, Harald. I mean, the Galia farm business, obviously going from strength to strength. I remember in the past, we tried to do the math 1 generator can produce that many doses of whatever test equipment you want to enrich if you do that, it's kind of hard to understand that this business is still growing at this huge pace. Can you give us an idea what the capacity utilization of a generator is I understand that you have to replace it after like 250 days or so anyway. But do you feel that those generators are properly utilized? Or is it just that everybody now who needs 1 orders 1 despite not having really enough tests to do on such a machine.

This is a good entrepreneurial question because there was a lot of hesitation 1.5 years ago that, in particular, smaller radio pharmacies in the U.S. we're hesitating to acquire to purchase a generator before being rest assured they have enough kits to be assembled with Gallium or to run the procedures. Now we see really strong success of companies [indiscernible] others, they feel more confident to enter and the feel. And they also get the commitment from big pharma from Novartis and Del that they will have an ongoing supply for their kids, which had some starting difficulties in the very beginning. Now it's an ongoing business, even where they have the reimbursement topic reassured for the time to come.

So where you pharmaceutic pharmacies in North America do really have the confidence that this is a valuable content business and now entering into the field. So there were new pharmacies coming into the business and the others engaging their business. Right you are, if you now look -- the years ahead from today, then there will be some kind of satisfaction in the North American part unless we will have new compounds in the DRP, which will then need for even more increasing demand and/or what is even more fascinating that Provitris so effective in the treatment of prostate cancer that it is likely it is from mine understanding that companies like Novartis will put a lot of effort into upgrading their product from economy class to business class or with others, third-line treatment to second-line treatment equivalent to hormone therapy or chemotherapy.

Now if that happens, then the increase of policies will be really fantastic. And that also brings in generic companies or compete companies from Italy or from others into the market also to trying to gain on that fee.

Now we are just stupid supplier and the more companies or the more need in the market is for imaging procedure, the better for us. So that's why I'm saying Galia Farm will continue to grow. And next time you come here to Berlin, happy to also show you how we want to expand our production facilities to code the increasing demand in the years before.

Can I ask an add-on question. I remember in the past, you were selling the generate actually to Novartis and Novartis was supplying it to the to the radiopharmacies. I mean that was the case when there was basically only net spot, right as a test. Right now that there are different tests also from different companies, is Novartis still supplying the volume generator to the pharmacies and than maybe the pharmacy does an EVO test on it?

Or how do I have to understand that.

Now in the big field, it was a bundle fold. It was living in Paradise 1 customer, Novartis asking for 100 generators. Here's the checklespay end of start. And now the life has become completely different, in particular, Oleg and his team. They have provide invoices and reminders to each and every pharmacy in South Dakota, which makes life much more complicated or to make sure that. Now Novartis is still our customer because I mentioned that they are entering new fields. So in countries like Japan or whatever, we are working directly with Novartis in order to make sure that they are supplied with our products for their scientific studies, they are doing in order to enter the field into Japanese areas.

So ladies and gentlemen, looking here into the field of [indiscernible] participants. Alexander is another question. As usual, I find over before we close the session. Here, you go Alexander.

I'll be short. And just to pop into my mind when we were talking about the larger volume generators. I wonder what's the replacement cycle of those bigger generators is? Is it the same to 170 days -- or is it stretching longer and what this means for the recurrence of the [indiscernible]

Yes. So the lifetime of Galaya farm 100 is longer, in particular, for North America, we have a longer possibility and that applies in particular to the high volume generator -- now in strong usage in pharmacies still before the year's end they will ask for a new 1 because particularly the pharmacy is having a high demand of imaging procedures, they are using to draft the beer various times a day. and that brings them into situation that even before the gears and they are asking for a new one, which is good for them because they have constant high density out of it. And for us, it's also because we can then make their current business within a year's time.

In general. Good. I'm looking around 37 participants. It's all recorded. So for those, if you want to have it instead of Netflix, tonight have a look again. It's already 45 minutes, so same length. Otherwise, thanks for participating for asking questions. Stay tuned. And if you have any more questions, don't hesitate with [indiscernible] already thank you.